This morning I watched reports about the strengthening U.S. dollar hitting new highs and precious metals hitting new lows. One would think that “King Dollar” was about to become the safe haven for the world’s investors, but it is not. The dollar is no better than any other fiat currency. In fact, it will soon show its true weakness. The dollar is doomed to failure as a store of wealth for a number of powerful reasons.
Perhaps you have noticed that Iran has decided to move out of the Petrodollar trading norm of the past. Iran recently signed a deal with the Chinese to accept the Yuan in trade for oil. This agreement signals a major change in the status of the dollar as the currency in which oil is traded worldwide. As nations work around the dollar, the dollar becomes worth less. This development signals the dollar’s doom.
I’m sure you have also heard that China, Russia, Brazil, India (the BRIC nations) and other powerful nations of the world are talking about either the creation of a basket of currencies to replace the dollar as the major trading and reserve currency of the world or the creation of a new “global currency”. These nations and many others are trading in other currencies now and are dumping the dollar. This development signals the dollar’s doom.
What does it mean when nations dump the dollar? What does it mean when central banks and nations prefer gold, oil, other commodities, stocks, land, or other currencies instead of the dollar? Eventually it means that the dollar will lose value or, in other words, purchasing power. As countries like China who have held trillions of dollars divest themselves of these holdings the dollar will lose value. This signals the dollar’s eventual doom.
The investors of the world are confused today. They are afraid of the debt crisis and tumbling Euro PIIGS, Portugal, Ireland, Italy, Greece and Spain. They flee the Eurozone for the dollar thinking there is safety in a U.S. Federal Reserve Note. But they are wrong. The dollar is sick and on its death bed for the same reasons that the Euro and other currencies are sick, because, like them, the United States has embraced socialism. We are on their path which dooms the dollar to ultimate worthlessness.
Some say it is “capitalism” that has failed. They need to define their terms. All nations run a form of capitalism, even the Communist Chinese control capital. The heads of the communist party there are the capitalists since they own and control the capital (not the people). America used to run on Free Market Capitalism where individual earners had property rights and the right to control their own capital. However, Socialism has flooded into America and taken market control and ownership away from those who earn the capital and redistributed the wealth to those who do not earn it. That is not free market capitalism, that is socialist democratic capitalism, something more akin to fascism and/or the early stages of totalitarian communism. It is a major move towards totalitarianism. This socialism is what is failing, not free market capitalism. This socialism is what is destroying the dollar.
More basic than that is the lack of honesty, integrity, morality, and godliness, or in other words the growing evil and criminality that have entered into major institutions of government and banking including all the Wall Street banksters, the IMF, the global banking system, etc. As the hard working people of the the United States and other nations see the governments and the central banks siphon off their money and the value of their money through redistribution of wealth plans (theft from the producer and tax enslavement of the producer), dilution of currency value (currency inflation which robs the value of dollars and other currencies earned and saved by workers) and bailouts to criminal banks, bankrupt cronies (such as GM), fraudulent insurance companies (such as AIG), foreign countries (through IMF, World Bank, U.N. and foreign aid), and millions of illegal aliens allowed into the country to increase the ranks of socialism and suck up unearned benefits, they lose all confidence and trust in such a system, a system that has now violated that trust for decades. Who can blame honest Americans and honest citizens everywhere of being tired of the giant fraud that has been perpetrated worldwide by socialists for over a century?
The U.S. Federal Government in league with the banksters at the Fed will try to paper over the problems they have created with their socialist promises of an endless cornucopia of useless government jobs, and limitless unearned benefits by printing gargantuan, unimagined amounts of Federal Reserve Notes (debt notes, euphemistically called dollars). This cannot long term be good for the health of so called “king dollar”. This monetization of debt plan will not work. Rather, it spells the doom of the dollar. As Economist Mish Shedlock stated so well in his recent economic trend analysis:
“If Wishes Were Fishes
If monetary stimulus worked, the LTRO would have been a spectacular success already.
If monetary stimulus worked, housing in the US would be in full-blown recovery.
If monetary stimulus worked, Japan would not have a debt-to-GDP ratio above 200%.
If printing worked, Zimbabwe would have been the greatest country in the world long ago.”
As I have said before, the dollar can still appreciate relative to other falling currencies, currencies that are being debased at a rate faster than the dollar’s, but it will not, over the long run, appreciate relative to the cost of commodities. The dollar is doomed.
Our own treasury secretary is conspiring with the Chinese government asking China to strengthen the Yuan with a promise to, in exchange, weaken the dollar. I wonder if the American masses know this is taking place now. As this effort unfolds your dollars will lose value.
As world commerce frees itself from the dollar the dollar will become worth less and less until it is as worthless as an Indian Rupee or worse (see: www,area,info.net/articles/show.php?cty=Salt%20Lake%20City&st=Utah&article_id=951).
The series of events that are coming will eventually pop the U.S. Treasury bond bubble. Already China and Japan are backing away from buying more of the U.S. federal debt. The Fed has stepped in and is now buying much of the U.S. government debt that foreigners no longer want. They do this by printing more Federal Reserve Notes. The more of these debt notes that they print, the less they’re worth. The dollar has become a store of declining value, a guaranteed confiscation of wealth, a fraud and a lie. Don’t be fooled because fools rush in to buy U.S. government debt, debt that will be paid back with a doomed Federal Reserve Note.
The Fed also prints trillions of Federal Reserve Notes to shore up sick banks in Europe. Those dollars add to the overseas supply of trillions of dollars. As these dollars eventually repatriate to the U.S. to buy our goods, our stocks, our land, our companies, and our other hard assets, they will drive up prices making the dollar worth even less. The dollar is doomed.
Today it costs approximately $2.80 to buy a pre-1965 90% silver U.S. dime. That is because the paper dollar has lost a great deal of value relative to silver money. The paper dollar is backed by nothing. Two silver dimes will still buy a gallon of gas, just as it did back then. So, it’s not so much that commodities like gas, water, and food have become more expense (they are not more expensive relative to other commodities such as the silver in an old dime), but that the paper dollar has become so plentiful as to have become worth a great deal less. The effects of currency inflation or monetary inflation are ultimately price inflation, or said another way, a fall in the value of the paper dollar.
This inflation can be traced back to the many underfunded redistribution of wealth programs and other governmental boondoggles (such as endless U.N. wars) that we see today that cause increasingly gigantic deficits. These massive bankrupting deficits are a failure of socialism, the socialism that America has gradually embraced since Woodrow Wilson. The socialism it embraced with FDR’s gold theft, the socialism it embraced with FDR’s socialist Social Security program, with LBJ’s “great society” program, with LBJ’s socialist Medicare and Medicaid programs, with myriads of other socialist programs embraced by Congress and other presidents over the years. Even the supposedly conservative president George Bush enacted trillions of dollars of new socialist programs with his all Republican Congress as he entered office. The Marxist/Fascist/Socialist President Obama has continued and escalated the same deficit spending path that Bush was on. He, together with a corrupt Congress, continues to escalates the U.N. Middle East wars, increases the deficits, and institutes ever more bankrupting programs such as Obamacare. No wonder the dollar is doomed.
It is highly ironic that as Americans fought against the socialists in Nazi Germany (the National Socialists or Nazi Party), the socialist/Communists in China during the Korean War, the socialist/Communists in Korea during that same war, and the socialist/Communists in Vietnam, and the Fascists in the Middle East, while at home we were adopting socialism in the form of Social Security, Medicare, Medicaid, ObamaCare, etc.. How ironic it is that America has embraced these failed systems that we fought against around the world to defend freedom, and now we want to blame the failure of embracing socialism and its results on the free enterprise system that preceded it. True free enterprise does not exist in American Health Care, in American Real Estate markets, in American Banking, in American Education, in American Farming, etc. It has been replaced by government controls, government meddling, and government intervention. Let’s face it, our failure is a result of the socialism that we have embraced, the very socialism that America’s military might fought against for decades.
Many so called “banana Republics” and other socialist democracies have followed the mob ruled path of bankrupting their currencies by printing ever more to finance endless deficits created by the promise that government can “redistribute enough wealth to make everyone rich”. The promise that nobody has to work, that they can all receive free health care, free housing, free loans, free food, free education, etc. and that the rich can pay for it all is a lie. It is a lie, that when embraced, always ends in universal poverty (except for elites in government), in wealth destruction,and in currency destruction. We can see this very scenario playing out in socialist Greece, Socialist Spain, Socialist Italy, and Socialist France. The socialist United States is just behind them. We are on their socialist path to economic destruction. That is why the dollar is doomed.
Don’t be fooled, fascism is just another brand of socialism. Socialism is failing here in America just as it has everywhere else. Don’t bet on the dollar or treasuries as a safe haven for your wealth. It is not. America’s empire building, socialism, deficit spending, and limitless government all guarantee the dollar’s doom. Presidential Candidate Ron Paul’s book “End the Fed” explains this problem well and the solutions which are generally ignored by government and much of the media. Ron Paul has been laughed at, ridiculed, and marginalized by the liberal mainstream media, by Democrats, and by Establishment Presidential Candidates for pointing this out, but he is right, the dollar is doomed. (see: http://www.amazon.com/End-Fed-Ron-Paul/dp/0446549193)
The value of precious metals will never go to zero purchasing power as the doomed dollar may. Precious metals are likely to continue their hundred year secular bull market over the years ahead. They are one way to opt out of the currency game. Consider buying some now while prices are down relative to false dollar values. Buy when others are fearful; sell when others are euphoric. Buy into weakness; sell into strength. Now is the time to buy precious metals, not dollars. Don’t play their currency game unless you want to get burned.
Investing in stocks and precious metals is risky and could result in losing money. I am offering ideas for your consideration and education. I am not offering financial advice. Please do your own due diligence. I am not an investment adviser. Precious metals are not for everyone. I sell precious metals through American Gold Reserve. You should do your own due diligence when making investment decisions of any kind. You should consult your own financial advisers before making any investment decision. I make no guarantees that by following any advice or suggestion I might make that you will realize any return. Beware, all commodity markets and other markets carry risk of loss.